| As I have indicated before, my parents were a little remiss in teaching me the benefits of saving for the future. I refuse to ignore this lesson when it comes to my child. He will have an investment account that I will open for him and I will use the same strategies and intuitiveness for his account that I have used to open my own account.
Perhaps some numbers can bring to life the impact of the concept of compounding. The Motley Fool did the calculations for me, and I was flabbergasted! In their efforts to encourage us all to invest now, for our future or our kids' future, they have provided some eye-opening numbers. To
whit:
The Motley Fool would encourage us to save $1.00 a day and at the end of every month, put that $30.00 into a simple investment that was returning 5 percent annually, hypothetically. If we did this faithfully, every month, just $30.00 (saving $1.00 a day)…in 55 years we would have accumulated $101,256.50!
My precious son, in 55 years, will be a young man of 63 years of age. And he will be singing his praises about me for having had the foresight to open an investment account and add a little bit to it every month, and he WILL have the wherewithal to understand that he has a nice nest egg because of me. As his Mother…it's the least I could do for him.
On the other hand, the Motley Fool would also like us to consider another type of investment strategy. If we took that same $30.00 a month and put it in an investment that was returning 9 percent annually, it would hypothetically earn you a whopping $481,795.95 in 55 years!
But of course, everyone's investment horizon will be different. For some of you, Moms, the window will be more like 5 years, or 15 years, not necessarily 55 - we are BUYandHOLDers for the long-term, however long that may be.
But right now, I am looking into investing for my son's future. That is why today we are going to look into setting up custodial accounts for our kids. They are easy to set up because we're now "pros" at this investing stuff. We've already set-up our own accounts and are investing for ourselves and, as loving and caring Mothers…we really do need to provide some type of investment strategy for our kids. The advent of the web has made this task so easy, there really is no reason to neglect starting an investment strategy for them.
And besides, I really can't stand the thought of my son thinking back on his childhood and wondering why I didn't even consider some type of investment plan for him. Mothers guilt at work here, no doubt.
My guilt level is high enough when I have to dish out consequences for bad behavior. I'd like to leave him with some joyful memories…and a nice nest egg, when he's older, has got to be considered joyous!
So…I'm on my way to open his account now and will report next week about any differences and what to expect from a custodial account. I would also like to consider an investment strategy for my elderly parents. I am fortunate to have both of my 85ish young parents still with me and I'd like to try to change the unpleasant notions my father has of market fluctuations based on his memories of the stock market crash in the 1930's.
Thank you for joining me,
Joyce
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